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Saturday, May 21st, 2016

Five banks sued in U.S. for rigging $9 trillion agency bond market

Author:     Jonathan Stempel
Source:     Reuters
Publication Date:     Wed May 18, 2016 8:26pm EDT
 Link: Five banks sued in U.S. for rigging $9 trillion agency bond market
Stephan:   Three readers sent me this story on the same day and each one said some variant of, "I will bet you that no one ever goes to prison on this scam." I not only agree with them, but I see such comments as examples of what has gone so seriously wrong with our government's economic policies. It is a terrible trend. Compare those perceptions with the the S&L crisis, and you will see my point.
The Bank of America building is shown in Los Angeles, California October 29, 2014. REUTERS/Mike Blake

The Bank of America building is shown in Los Angeles, California October 29, 2014. Credit: Reuters/Mike Blake

Five major banks and four traders were sued on Wednesday in a private U.S. lawsuit claiming they conspired to rig prices worldwide in a more than $9 trillion market for bonds issued by government-linked organizations and agencies. (emphasis added)

Bank of America Corp (BAC.N), Credit Agricole SA (CAGR.PA), Credit Suisse Group AG (CSGN.S), Deutsche Bank AG (DBKGn.DE) and Nomura Holdings Inc (8604.T) were accused of secretly agreeing to widen the “bid-ask” spreads they quoted customers of supranational, sub-sovereign and agency (SSA) bonds.

The lawsuit filed in Manhattan federal court by the Boston Retirement System said the collusion dates to at least 2005, was conducted through chatrooms and instant messaging, and caused investors to overpay for bonds they bought or accept low prices for bonds they sold.

“Only through collusion could a dealer quote a wider spread than market conditions […]

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